Friendships and Blue Chips

Friends. They are the people that we hang out with to have a good time and depend on when the going gets tough. Recently a friend of mine came out with a financial analogy for friends.(Brilliant thought Mindy!)

In her view, we can look at friendship in two categories. Old friends and new friends. Old friends shall be referred to as Blue Chips and new friends shall be referred to as IPOs.

For friends of old, they tend to be more like the blue chip stock because they are usually reliable, stable and will always nett a good return and are relatively risk free. Likewise their level of friendship; always dependable, reliable and relatively hazard free. And thus, require lesser time and effort to maintain and monitor. Plus they have withstood the test of time.

As for new friends, they are more like IPOs, new and exciting, present enormous possibilities and potential for growth. But, as most IPOs go, they are more risky than blue chip stocks. The risk of crashing and getting your arse burnt with new IPOs is much much higher and so is the return especially for the first couple of quarters but whether can it withstand the test of time, is a another matter altogether.

For some people, they cherish the blue chips but for others, blue chips are more prone to be ignored because they are boring. Same old routine, same old expected returns. Slow and steady. They prefer the more exciting IPOs! They enjoy the thrill because of the expectation of better returns and potential.

But more often than not, IPOs tend to tank more than succeed. They are exciting prospects but in my humble opinion, I think as far as friends go, don't you think investing in blue chips is better than IPOs?